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I'm debating a tax issue with my mechanic. I live in CT. I had the mechanic put a whole bunch of performance parts into my car at his shop in NY. He purchased the parts. I paid for both the labor and the cost of the parts. He's claiming that I owe tax on the parts that he purchased to install into my car. Shouldn't this be a "wash transaction?" In other words, the cost of and any tax on the parts should be deducted from my mechanic's gross income. I shouldn't be responsible for paying the tax. According to my mechanic and his accountant, NY state law states that all goods and services are taxable at the end user. I am the end user. At no point prior to starting the project did my accountant tell me that he would also be acting as the retailer for the parts needed for the project. I initially offered to purchase all the parts on my own and have them shipped to his shop. He assured me that it would be cheaper if he purchased all the parts himself. So, if all of the parts he bought were purchased for the purpose of completing the project for which I paid labor and reimbursed him for the cost of the parts, what is taxable and who is responsible for the tax?
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